The Australian dollar (AUD) continued its gains against the US dollar (USD) on Wednesday (5/14) after posting a gain of more than 1.50% in the previous session. The AUD/USD pair strengthened as the US dollar weakened following weaker-than-expected US inflation data.

The seasonally adjusted Australian Wage Price Index rose 3.4% year-on-year in Q4 2025, up from a 3.2% increase in Q4 2024 and beating market expectations of a 3.2% increase. This marked a recovery from the previous quarter, which recorded the slowest wage growth since Q3 2022. On a quarterly basis, the index rose 0.9% in Q1, beating projections for a 0.8% increase.

Australian Prime Minister Anthony Albanese was sworn in for a second term on Tuesday following a landslide election victory. Key cabinet posts—including treasurer, foreign affairs, defense, and trade—remained unchanged. Albanese is scheduled to attend Pope Leo XIV's inauguration Mass in Rome on Sunday, where he will also meet with leaders including European Commission President Ursula von der Leyen to discuss trade relations.

US President Donald Trump told Fox News that he is seeking greater access to China, describing the relationship as "very good" and expressing a willingness to negotiate directly with President Xi on a potential deal.

Easing global trade tensions have prompted investors to scale back expectations for aggressive interest rate cuts in Australia. Markets now expect the Reserve Bank of Australia (RBA) to cut its cash rate to around 3.1% by the end of the year, down from a previous forecast of 2.85%. However, the RBA is still expected to continue with a 25 basis point cut at its next policy meeting. (Newsmaker23)

Source: FXstreet